NEW YORK (CNN/Money) -
Merck & Co.'s latest double dose of bad news is likely to put a big dent in its earnings and could mean the drugmaker may not survive as an independent company, industry analysts said.

Merck may have to cut more workers or pursue a merger after an appeals court ruled one of its biggest drug patents will expire 10 years earlier than the company had planned, according to the analysts.

"Are they going bankrupt? No," said Morgan Stanley analyst Jami Rubin. "But they had a string of bad news like I've never seen before. Bad news has become a norm to the company."

Merck (Research) stock tumbled 10 percent Friday after the U.S. Court of Appeals in Washington ruled that the company will lose its patent on the osteoporosis drug Fosamax by 2008. Fosamax, with sales of $3.2 billion last year, is the company's second-biggest seller after cholesterol drug Zocor.

Separately, securities regulators stepped up their investigation of Merck's handling of Vioxx, the popular painkiller the company pulled off the market last September after finding that it increased the risk of heart attacks and strokes.

Morgan Stanley's Rubin said the surprise ruling on Fosamax would cut Merck's earnings by about 40 cents a share when the drug's patent expires in 2008.

Merck reported Tuesday that profits sank 12 percent to $5.8 billion, or $2.61 a share, last year, the lowest since 1998, hurt in large part by the Vioxx withdrawal.

Merck is considering an appeal of the Fosamax ruling, according to spokesman Tony Plohoros.

"Merck disagrees with the opinion of the court of appeals and is considering its options, including a request for reconsideration by the court of appeals," he told CNN/Money.

Plohoros said Merck is "committed to maintaining our dividend" and plans to stabilize growth through three new vaccines it will be submitting to the Food and Drug Administration this year.

Those vaccines include Rotateq, to protect against a rotavirus-caused diarrhea in infants, Gardasil, to prevent sexually transmitted infection and cervical cancer, and Zoster, for shingles.

"These vaccines, if they turn out as expected, should provide some comfort to investors by 2008 and 2009," said Sena Lund, an analyst for Cathay Financial who owns 200 to 300 Merck shares. "From what we have seen so far, they look like feasible products."

But it might take more than that to produce earnings growth any time during the next five years, according to Barbara Ryan, analyst at Deutsche Bank North America.

"The only way this company can improve their earnings is through pursuing a merger or by being acquired," said Ryan. "It's not very innovative, but it's what they're going to have to do."